Medical Records Request Letter

How to respond to this newest administrative headache from CMS contractors more motivated than before to challenge claims.
Don’t be surprised if you receive a “Medical Records Request Letter” from a CMS contractor. Unlike similar such letters issued in the past by third party payers holding your submitted claims, this one will be coming from a government contractor who is being paid on a percentage basis of any recovered billing errors from the past that they can unearth.

Contingency-Based Payment

This is the first time CMS is using the contingency-based payment module to pay a contractor. Of course, that will lead to a great financial motivation to the recovery audit contractor (RAC) to challenge any claim that is being audited. It is almost back to the days of bounty hunters in the Wild West.
While CMS apparently thought this payment methodology made sense since because it is standard practice among private health care payers, it seems ironic that if providers established a contingency (percentage) payment system among each other, it would be considered fraud and abuse by CMS!

Background

This RAC program began in 2005 as a 3-year pilot program covering California, Florida and New York. In 2007, Massachusetts, South Carolina and Arizona became part of the program. Now, RAC’s will be extended to 50 states by this year.
Since 2005, RAC’s has found $1.03 billion dollars of improper payments. Among these overpayments, 85% came from inpatient hospital payments and only 2% — $19.9 — came from physicians.

How the Process Works: Step by Step

• Once you receive that “Medicare Records Request Letter,” you have 45 days to respond. Otherwise, it will be treated as an actual overpayment and trigger the recovery process.
• RAC’s have 60 days to make their decisions after receiving the medical records.
• You have 120 days for the first level of appeals.
• If your appeal is overturned, you then have 180 days to file a request for a second level appeal recommendation with a qualified independent contractor.
• The third level of appeals is a hearing with an administrative law judge (ALJ), which can be filed within 60 days of a second level appeal recommendation from the qualified independent contractor.
• Fourth level of appeals — this Medicare appeals council (MAC) review is within 60 days of receipt of the ALJ’s decision.
• Final level of appeal can be filed with Federal District Court within 60 days of receipt of the MAC’s decision.

The Rules of Audits

The number of medical record request is limited to:
• Solo-physicians — 10 medical records per 45 days
• 2 to 5 physician groups — 20 medical records per 45 days
• 6 to 15 physician groups – 30 medical records per 45 days
• 16 or larger physician groups — 50 medical records per 45 days.
RACs can only go back 3 years, which means they can request 240 medical records from a single physician and 1,200 medical records from a 16 or larger group practice.

Possible Consequences for Medicare Patients

Given the amount of paperwork, financial burden, legal fees due to attorneys and the stress on you and your office staff this may entail, it makes me wonder about the impact this is likely to have on treatment of Medicare patients. I think that this whole process will lead to ill feelings and eventually cause a lot of providers to opt out of the Medicare system.
Dr. Kircik is an Associate Clinical Professor of Dermatology at Indiana University Medical Center. His is also the Medical Director of Derm Research, PLLC, and Physicians Skin Care, PLLC, in Louisville, KY.
Disclosure: Dr. Kircik has no conflict of interest with any material presented in this month’s column.